Chile electricity trader talks energy storage incursion, industry trends

Energy storage is gaining traction in Chile. 

While the bulk of the growing pipeline is capacity incorporated into renewable energy parks, standalone systems are starting to emerge. 

Reflecting this, electricity trader Emoac, a unit of Chilean holding Copec, signed a power-purchase agreement with generator Atlas Renewable Energy for use of the latter’s planned BESS del Desierto storage system.

Allowing for the storage of electricity during daylight hours and for injection when the sun sets, BESS del Desierto will comprise 200MW of four-hour injection duration batteries. 

To find out more and touch on the areas of financing and industry trends – and for an update on a possible lowering of the capacity barrier to the non-regulated electricity market – BNamericas conducted an email interview with Emoac CEO Vannia Toro.

BNamericas: Copec’s electricity trading unit Emoac and Atlas announced the signing of their first energy purchase and sale agreement, which involves a storage system, BESS del Desierto. How novel or relevant is this agreement for the Chilean electricity trading sector?

Toro: This agreement constitutes an important innovation by positioning Emoac as a ‘virtual owner’ in the electricity sphere. This means that Emoac assumes a crucial role in the management of energy assets from renewable sources. Furthermore, the completion of this agreement is a momentous step on the path towards the second period of the energy transition in Chile and demonstrates that energy traders are leveraging the development of new installed capacity.

The BESS del Desierto project is a pioneer in Chile as it is the first large-scale [200MW or bigger] energy storage system in the country that uses BESS [battery energy storage system] technology. This technology allows surplus solar energy generated during the day to be stored and then injected into the grid during the hours of greatest demand, for example, at night. This storage capacity contributes significantly to the stability and efficiency of electricity supply, in addition to promoting the integration of renewable sources into the Chilean electricity grid on a continuous basis.

BNamericas: Given the surplus of solar power in the north and the multi-gigawatt pipeline of solar PV projects, are more deals like this foreseen?

Toro: The oversupply of solar energy in the north and the growing pipeline of photovoltaic projects of several gigawatts, together with the high day-night price spread, make it highly probable that more agreements like the one between Copec and Atlas will be signed in the future. 

Various factors drive this trend: the surplus of solar energy that needs to be stored to avoid it being curtailed, the lack of transmission systems in the medium-long term, the growing demand for electricity, the reduction in costs of storage technologies, the development of favorable public policies and the interest of the private sector in a matrix low in carbon emissions.

We are likely to see more similar agreements in the coming years, which will play a fundamental role in the country's transition towards a more sustainable and efficient energy matrix.

BNamericas: Is it feasible or likely that, in the future, supply contracts could be used to obtain financing to build standalone storage systems?

Toro: The recent agreement between Atlas Renewable Energy and Copec, where a contract was signed for the development of a battery energy storage system with capacity of 800MWh in Chile, is a clear indication of the viability of these projects. This type of agreement not only demonstrates the technical and economic feasibility of independent storage systems but also reflects a change in market perception regarding its financing and the supply contracts that make it viable.

The use of supply contracts to obtain financing in this context is particularly promising. These contracts ensure a predictable and sustainable income stream, which is crucial to attracting investment. By demonstrating that long-term commitments can be established for the purchase of stored energy, these agreements increase the confidence of investors and financial entities in the stability of the returns from these projects.

Furthermore, the success of this pioneering project could set a precedent for the financing of future energy storage projects. In an energy market like the Chilean one, characterized by its high penetration of renewable energies and the need to manage intermittency and improve network stability, independent storage systems are presented as a strategic solution.

It is therefore reasonable to expect that supply contracts will continue to play a vital role in financing these systems. The experience of Copec and Emoac could inspire other companies in the sector to explore similar agreements, thus promoting the development of more storage projects in Chile and possibly in other regions.

BNamericas: Related to this, have you noticed any trends in the local world of electric power trading? For example, I imagine the demand for green energy 24 hours a day from the commercial-industrial sector only continues to rise.

Toro: Trends in the local electricity trading market show an increasingly firm focus on sustainability and efficiency, key aspects in the current context of energy transition.

First, we observe a sustained increase in demand for green energy during the 24 hours of the day, not just limited to the hours of greatest solar production. This is largely due to pressure from commercial and industrial sectors seeking to minimize their carbon footprint. In response to this, companies such as Emoac and Copec are committed to ensuring that the energy supply to their customers is 100% renewable. 

This commitment and traceability of the above is facilitated through use of the RENOVA platform, offered by the national electrical coordinator [CEN], which allows renewable energy certifications to be transacted in a transparent and efficient manner.

Furthermore, the variation in marginal costs between day and night has led many consumers to reevaluate and, in many cases, modify their consumption patterns. This is due to the high cost of energy during nighttime hours, which drives customers to shift their consumption towards the day when prices tend to be lower and the availability of solar energy increases, thus optimizing their energy expenses.

In any case, Emoac is contributing to reducing and stably supporting the marginal costs at night with the battery projects that we have today, supply costs to clients with battery projects we have today, in addition to providing digital information regarding instantaneous consumption and the distribution of costs that these imply in their operations.  

On the other hand, customers are increasingly valuing proposals that not only focus on energy supply but also integrate solutions for digitization, energy efficiency, and other sustainable measures. This trend reflects a shift toward finding comprehensive solutions that not only meet energy needs, but also contribute to broader corporate goals of sustainability and technological modernization.

In summary, the Chilean electricity market is rapidly evolving towards a more integrated and sustainable approach, where clean energy solutions and energy efficiency are increasingly valued by consumers.

Emoac and Copec, with their vision of contributing significantly to the energy transition, are well positioned to lead and promote these trends, offering their customers not only energy but also added value through innovation and sustainability.

BNamericas: Last year, the energy ministry asked the competition court to issue a report on the feasibility of lowering the threshold to become an unregulated electricity consumer to 300kW. This measure is supported by power trade association Acen. Is there any news on this?

Toro: The competition court, TDLC, has not yet issued an official ruling on the request to lower the capacity limit to 300kW from 500kW. They are in the study and analysis phase of the background information presented by the parties involved.

It is important to note that the TDLC has not established a specific date to issue its resolution. Therefore, we continue to wait for its decision.

We hope that the TDLC makes a fair and favorable decision for small and medium-sized companies, since the reduction would mean an important benefit for this sector in terms of optimizing energy costs and improving competitiveness.

Editor's note: Non-regulated clients are companies that are connected to more than 500kW of capacity and have opted for that classification, or those connected to more than 5MW of capacity. Those below the 500kW threshold have no choice regarding their power provider.